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Key points to remember
- White-collar workers may face greater job uncertainty in the months ahead.
- Layoffs in the tech sector may have marked the start of a tough time for white-collar workers.
- Increased automation and overhiring over the past year could push white-collar workers down the fastest.
Recession fears have been swirling for months. With skyrocketing inflation, consumers across the country are feeling a pinch in their budgets. Living paycheck to paycheck is becoming more common, prompting many households to cut spending.
As this decline in spending begins to seep into the economy as a whole, some companies are making big changes to their workforce. Specifically, white-collar jobs are at increased risk of being cut.
Recession fears
The start of this tumultuous economic period is often attributed to the devastation wrought by the global pandemic.
Many analysts are predicting a potential recession in 2023. Although there are different reasons for this, many investors and companies are taking a bearish approach in these uncertain times. Among the main concerns are high inflation, rising interest rates and geopolitical instability.
While white-collar workers appeared to be doing better economically than blue-collar workers during the pandemic downturn, many economists expect the tables to turn in the event of a recession next year.
Potential impacts on white collar workers
Even though many economic indicators point to a recession, it is impossible to predict when or if it will happen.
If a recession looms, white-collar jobs appear most at risk of cuts in a coming recession. Post-pandemic, the rush to hire white-collar workers may have caused many companies to overhire.
While the demand for blue collar workers is still relatively high, the demand for white collar workers seems to be decreasing.
Where we already see this impact
White-collar workers in the tech industry are already seeing an increase in layoffs. In fact, thousands of white-collar tech workers have already lost their jobs in 2022.
Here’s a look at some of the companies that are carrying out large-scale layoffs:
- Twitter: After the takeover of Elon Musk, 50% of the workforce was laid off. With this, approximately 3,700 employees lost their jobs.
- Lyft: Lyft recently laid off about 13% of its workforce, or 700 employees.
- Bandaged: Stripe laid off 14% of its workforce, meaning over 1,000 people lost their jobs.
- Meta: Facebook’s parent company has made one of the biggest workforce changes. It laid off more than 11,000 employees.
Waves of tech layoffs are pushing thousands of white-collar workers out of their jobs. The reasons for this rise in layoffs vary.
While many people point to uncertain economic times, others blame increased automation and overly optimistic hiring in the post-pandemic economic recovery.
However, the tech industry isn’t the only place where white-collar jobs are under threat. As companies across the economy seek to restructure their workforces, white-collar workers appear to be at greater risk of layoffs.
How white collar workers can prepare
At the individual level, there is nothing we can do to stabilize the economy. After all, those macroeconomic factors that bring us closer to a recession are largely beyond the control of household budgets.
Nevertheless, it is possible to take measures to protect yourself from a layoff.
Boost your emergency fund
In all economic conditions, an emergency fund is a stabilizing element of household finances. It is a particularly useful tool in times of economic turbulence.
Since these are very uncertain times, bolstering your emergency fund is one way to prepare for a possible layoff.
The size of your emergency fund will vary depending on your needs. Many experts recommend saving three to six months of expenses in your emergency fund. If saving that kind of money seems impossible, start small. Even putting away a few hundred dollars can help.
In the best case, you will never have to touch your funds. But worst-case scenario, you’ll have that money to fall back on after a layoff.
Lower the costs
When preparing for a recession and potential job loss, it is imperative to cut costs wherever possible. You can start cutting costs by delaying a major purchase, bargain hunting, or removing coupons.
Additionally, you may want to consider eliminating a fixed cost from your budget. This could include a streaming service, a gym membership, or a subscription you don’t use.
Prepare to hunt
If you’re worried about your job being on the line, it’s a good idea to be ready to start looking for a new job. Here are some steps you can take to prepare for a job search:
- Update your CV
- Learn a new skill
- Join your network
By following these steps in advance, you will be ready to go if your position is eliminated in a recession.
Will this have an impact on your investment portfolio?
Whether or not you’re a white-collar worker uncertain about your job security, you’ll see the impact of a recession on your portfolio, as all investors will. As businesses feel the effects of larger economic problems, they will be forced to adapt to changing times.
The measures taken to adapt will inevitably have an impact on the company’s stock.
For investors in a turbulent market, it is wise to monitor changes closely. Unfortunately, the reality is that most investors don’t have the time or inclination to follow every market change.
Luckily, you can harness the power of artificial intelligence to track market developments for you. Q.ai offers investment kits that are updated weekly based on your goals and market conditions. As an investor, this can simplify your decision-making process, while ensuring your portfolio is up to date.
For example, adding the inflation kit to your portfolio can help you anticipate the effects of inflation.
Conclusion
White-collar workers could be hit hard in 2023. If a recession occurs, these workers will likely face greater job uncertainty.
As a white-collar worker, you can prepare for uncertainty by building up your emergency fund, cutting costs, and being prepared to look for a new job. As an investor, you can take advantage of artificial intelligence to keep your portfolio up to date in a turbulent and constantly changing market.
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